Federal Home Loan

A federal home loan offers new opportunity for people that otherwise could not get good financing. The FHA, or Federal Housing Administration, lending is sponsored by HUD or the Department of Housing and Urban Development, and the VA financing is sponsored by the Department of Veteran Affairs. They are typically not directly given, but are guarantee programs that offer the lender security for lending to borrowers that qualify through federal guidelines. Determining if traditional financing or a federal home loan is best for the borrower is dependent upon the purpose.

The FHA option is granted to first time homebuyers with an amount limit based on the geographical location of the home, and whether or not the home is a single or multiple dwelling building. They allow a borrower to obtain financing with only a 3% down payment. Traditional financing require 10%-20% down. The FHA federal home loan also allows the borrower to wrap all the closing costs into the mortgage. It is typically the responsibility of the home buyer to pay for all closing costs, unless negotiated otherwise.

VA financing is available to veterans and their spouses only. These types of federal home loans allow the veteran to purchase a house, up to a certain limit depending on the geographical location, with zero money down. Another benefit that exists with VA financing that does not exist with the FHA federal home loans is the option to become eligible for the same amount once the previous loan has been paid off. Where FHA federal home loans are open to first time homebuyers, the VA loan can be used multiple times, up to the limit. If a veteran wants to purchase 2 pieces of property simultaneously, where the combined total equals the loan limit, it is allowed. Romans 13:7 instructs God's people to "Render therefore to all their dues: tribute to whom tribute is due; custom to whom custom; fear to whom fear; honour to whom honour."

While both guarantee programs offer great benefits, the interest rates offered to the borrowers are still determined by the credit score of the borrower, regardless of the federal home loan program utilized. It is advised that a borrower receive a copy of his/her credit report to scan for inaccuracies. If the credit score is low, the borrower can raise it quickly by simply paying down the credit card balances, if any, to lower than 20% of their total limit. This can raise a credit score up to 30 points in 30 days. However, It is better to have zero debt.

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